Trend of overseas buyers investing in London property set to continue
UK buyers accounted for the majority of property purchases in the prime market in London in 2012 but more foreign buyers are snapping up real estate in the UK’s capital city and this trend is set to continue. Overall 58% of homes being bought were by domestic purchasers, according to the latest analysis report from Knight Frank, although when it comes to new builds that figure drops to 27%.
Europeans accounted for 13% of all sales during the year, while one in 10 of sales were to Asian buyers and almost 5% of sales were to Russians. In the new build sector buyers from Singapore and Hong Kong accounted for 23% and 16% of the market respectively. Chinese and Malaysian buyers accounted for 5% and 4% of sales in 2012.
Overseas buyers purchased new build property in London worth some £2.2 billion in 2012, up from £1.8 billion in 2011. When ordered by total investment rather than number of transactions in 2012, Singapore and Hong Kong still top the charts, although Russia pips China to third place. By average investment per property, Hong Kong investors tend to spend slightly more than those from Singapore or China. The typical purchase price for new build property in prime central London among Asian buyers stands at around £680,000.
The average spend by Russian buyers tends to be the highest with some overseas buyers, especially Asian buyers, more comfortable with the idea of buying a property off plan. This practice more closely reflects the property market in their home countries the report points out.
Neil Batty, head of International Project Marketing at Knight Frank, said that Asian investors prefer properties based in zones 1 or 2, and ideally in near a tube station. The report also shows that properties close to the river are also popular, as well as regeneration schemes which guarantee that the public space around the property will be attractive and well maintained.
Quote from the PropertyCommunity.com : “Cities have typically recorded higher house price growth than the UK average over the past 10 with the majority also outperforming their region, new research shows.”
‘We expect the core Asian markets of Hong Kong and Singapore to remain strong, especially for the very best developments in the most desirable areas in London. Perhaps the biggest growth is expected in China. There has long been talk of a surge in investment in London property from China as the rising middle classes look for alternative investment opportunities, but this has yet to fully materialise,’ he explained.
Turkey is also an emerging market in terms of buyers of prime London homes where healthy economic growth during the last three years, far outperforming crisis hit Western economies, has led to continued wealth creation. India has often been hailed as a rising market for new London developments and while there is no doubt there is a long standing connection to London, and a strong interest in London real estate among Indian investors, buyers are not solely drawn to new build developments. In terms of marketing, buyers are often keen to visit the UK themselves before purchasing, rather than doing so off plan.
Indonesia is tipped to become a stronger player in the investment market in the coming years. For example, the number of searches for prime London property from Indonesia on Knight Frank’s global property search jumped by 22% in 2012, compared to 2011.